Equity Highlights October 2024

Welcome to Broyhill's Equity Highlights, where we share a few quick takes on recent news across the portfolio every month.  

We aim to make these highlights easy to read and easy to repeat. Feel free to share our work! 

Baxter on Hurricane Helene Updates. Hurricane Helene recently put Baxter's North Cove, NC, facility out of commission. This facility supplies 60% of the US healthcare system's IV saline, which is required in almost every surgical procedure. Baxter expects to resume production in phases by the end of the year and, in the meantime, is ramping production at its seven other facilities. We believe the temporary closure will have little impact on the stock but acknowledge there are others in the mountains of Western North Carolina who've fared far worse. Towns impacted by the hurricane need donations, volunteers, and, in some places, tourism, as October is one of the most profitable months of the year for towns along the Blue Ridge Mountains. We urge you to contribute in any way you can.

Results from the Annual National Youth Tobacco Survey. After raising the age requirement for nicotine products from 18 to 21, the 2024 National Youth Tobacco Survey is showing a steady decline in youth usage across products. Despite the stink politicians have made about nicotine pouches, like Zyn, the data showed that youth usage remains under 2%.

Flutter CEO warns of unintended consequences of tax hike. Apparently, we have an affinity for "sin stocks" as we recently initiated a position in a producer of live casino games. Like Philip Morris, the regulatory environment presents both a threat and an opportunity to the stock. In the case of the UK, raising taxes likely forces competitors and the consumer spending associated with their games to go to unregulated markets. In the US, regulation allows new states to legalize online live casino gaming and expand the industry TAM.

Rentokil rises after Trian's head of research joins board. We generally like to see activists pushing for change, especially in turnaround situations like Rentokil's. Next week, I am headed to Denver, CO, for the annual Pest World Conference to talk with Rentokil, Rollins, and other pest control companies. I can't wait!

Disclosures